Winning Strategies

The sales manager's options

Three approaches indicate the future level of an agency’s success

By Roger Sitkins

“You’re on the way to where you’re going!” is one of my all-time favorite sayings, and I really believe it sums up the end result for so many independent insurance agencies. But when you think about it, you have to wonder: Where are agencies really going? Are they increasing net new revenue? Are they really improving the profitability and value of their firm?

Sadly, due to the bad economy and risk shrinkage, the vast majority of agencies are working harder than ever just to maintain the status quo. Very few are growing their business while they’re doing all they can to stay afloat. This tells me that there is a lack of proactive, professional sales management to hold producers accountable. And I believe that is one of the greatest issues facing the independent agency system today.

Naturally, some will disagree and say that the “real” issues are the sluggish economy, the soft market, retention, reduced contingency income, and lower operating profits. Although I agree that all of these issues are affecting agencies, I strongly believe that those are the outcomes of the issues, not the issues themselves.

Plateau or grow?

Previously in this column, we’ve discussed Plateaued Producers and why, when they plateau, so goes the agency. That’s precisely what’s happening with many independent agencies today. In their quest to survive, they’ve stopped growing.

As we’ve said before, net new revenues won’t solve all of your problems, just most of them! So what are you doing to drive net new revenues? If your producers are not meeting and exceeding their sales goals, why not? And if they’re not retaining clients, why not? More important, what are you going to do about it?

My blinding flash of the obvious is that you and your agency have three options: (1) Do nothing; (2) reduce producers’ sales goals; or (3) change their behaviors. Let’s examine each of these.

1. Do nothing. If you do nothing, nothing will change. Yesterday becomes tomorrow unless we do something different today. The reality of it may be best expressed in two other ways: “What got you here will keep you here,” and “If you always do what you always did, you’ll always get what you always got.” So if you do nothing, you’re absolutely on the way to where you’re going!

2. Reduce producers’ goals. If we lower their goals just so they can feel good and “hit their numbers,” we’d better understand the consequences of doing so—because every action has a consequence. In this case, lowering expectations and goals may have many undesirable consequences, including:

Low or no net new revenue growth from producers. In fact, some of them could actually wind up losing more than they write. I’m sure you’ve heard the saying, “It’s coming in the front door and going out the back!” Well, this is one of the consequences of lowering your expectations.

An increase in practice quoting. If you lower producers’ goals and don’t truly hold them accountable for results, they’re going to do a lot more practice quoting and will be much more likely to pursue bad accounts. Chasing people with whom you’ll never do business is a huge waste of resources.

Low conversion rate. This is not Closing Ratio; it’s the percentage of “first appointments” that move forward in your selling process. In our Risk Reduction Approach™, the first appointment is an Executive Briefing, followed by a Risk Reduction Workshop™. Recently one of our members had a drastic lull in growth, which was very unusual for such a dynamic and aggressive agency. As I analyzed 11 months of data from them, I saw a drop in their conversion rate from 84% to less than 50%. It was a gradual process, but it was there.

We believe that you simply must “wow” the prospect in that first appointment. You must convince prospects that they are buying a unique and valuable experience, not a commodity. So within your own agency, examine your conversion rate from the time you’re first in front of a prospect to the point where you actually present a plan. What’s your conversion rate? It’s a crucial number to know.

The service trap. Lower your production goals and your producers are going to spend more time in the office trying to look busy, despite having less to do. This in turn will drive the internal team crazy. Our goal is simple: The producers must be available for sales and sales-related activities at least 80% of the time.

Decreased agency value. It should come as no surprise that there is a direct correlation between net new sales and increased operating profits and increased agency value. Therefore, if lower goals mean fewer sales and lower profits, guess what? The value of the agency can only decline.

To summarize: You must have net new revenue growth in order to grow your profits and in turn increase your value. All too often, however, we see that independent agencies fail to realize that increasing their sales is tied to increasing the value of their asset.

3. Change their behaviors. The first two options did nothing to help, so let’s examine why changing behaviors may be the only acceptable option. As you know, numbers (the actual results) are the end product of the producers’ behaviors. What are the producers doing to improve their results? The following Best Behaviors Checklist outlines what producers should be doing to achieve optimum results for the agency.

• Study. Are they really studying the game? Do they truly understand the selling process? Do they understand the product they’re selling? Have they developed that business acumen that we’ve talked about, or do they come across as a typical insurance salesperson?

• Low-risk skills practice. Are they spending enough time practicing what they do? The great ones—whether they’re athletes, entertainers or salespeople—are always analyzing and exercising their skills because they’re constantly working to improve them. In fact, you’ll notice that the ones who are the most successful are the ones who practice the most!

• Presentation rehearsals. The first time to practice a presentation is not in front of the prospect! Yet all too often, that is the case. Recently, while visiting one of our members, we ran a session on presentation skills and techniques. As an exercise, each producer had to stand in front of the other producers and present his or her Executive Briefing to me as the prospect. As nerve-wracking as it was for them to perform in front of me—and receive an on-the-spot critique—it made a huge difference in their performance. But what struck me was that it was most beneficial for the final few presenters who had learned from the previous presentations.

A key point to remember is that a presentation has to be a conversation, not a presentation. It’s “Death by PowerPoint” when presenters read exactly what’s on the slides, word by word. I believe most of your prospects can read English.

• Overflowing pipelines. It hit me recently that all too often we don’t really analyze our prospect pipelines. For most of us it’s not a pipeline at all, but a Prospect Funnel. A funnel has everything at the top that gets filtered on the way down. Most producers face a series of filters (accounts that are “too small” or too risky, or prospects who want just an apples-to-apples quote), with future ideal clients falling out at the bottom. But how much did it cost to get to that point, in terms of time and other resources?

The objective is to turn your funnel into a true pipeline from day one. How? You must spend time and energy to “filter” prospects up front, developing the ideal client profile and doing the research before ever meeting the prospect (via professional introduction, not just referral). You don’t start to filter after they’re already in the pipeline. But once they’ve made it through your filter(s), then it’s game on!

• The 5-10-20 plan. One of our Vertical Growth Advisors came up with this checklist to determine if you’re doing the right things as a producer. The “5” stands for telling your story at least five times a week to someone you don’t know. This is not a presentation, per se. It could be a matter of getting introduced to someone new, meeting someone at a networking event or talking to someone at church whom you’ve never met before and briefly telling them your story or personal infomercial, if you will. Have you done that this week?

As for the “10,” did you have at least 10 “in the game” appointments this week with clients, prospects or centers of influence? Finally, do you have a list of at least 20 “Future Ideal Clients” that you will be in front of this year?

The bottom line

With everything facing independent insurance agencies today, which of the three options will you embrace in order to enhance your company’s worth? We believe that you should be focusing on Net New Revenue Growth, which creates Increased Operating Profits, which increases the Value of what is probably your largest personal asset—your agency.

As always, it’s your choice!

The author
Roger Sitkins is founder and chairman of Sitkins International. He is the creator of The Vertical Growth Experience™ programs, which are offered exclusively to the Sitkins private client group. These programs focus on continual improvement of agency/brokerage operations, thus providing members with ongoing development and strategies that literally force vertical growth in the agency/brokerage’s critical indicators of closing ratio, revenue per employee, revenue per relationship, and revenue per producer.